Exxon aims to pump up its PNG gas

ExxonMobil will look to expand its $15 billion liquefied natural gas project in Papua New Guinea after launching fresh studies to find new gas reserves.

The US oil major has already committed to building two processing units, or trains, to handle 6.6 million tonnes of LNG a year as part of a joint venture with Australian energy companies
Santos
and Oil Search.

While
Oil Search
has already flagged its interest in doubling the size of the PNG LNG facility, ExxonMobil, as operator, will ultimately manage any expansion and also decide on which joint venture partners to bring on board for any future development.

“There is always interest in looking at expansion and those opportunities because to an extent you’ve got facilities built and you want to ensure they are full," ExxonMobil’s chairman John Dashwood told The Australian Financial Review.

“There is some seismic offshore exploration work happening [and] I think anything that made economic sense that would allow additional trains, just like at Gorgon, is very healthy."

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“My strong view is there’s substantial further upside in the existing fields which, given appraisal and exploration success, I think there’s a high likelihood there is enough gas to underwrite further trains."

Mr Botten said gas for the potential expansion could be sourced from the venture’s own drilling or third parties providing gas to the project.

“The easiest one to deliver is from the joint venture inside PNG LNG. If you look outside the venture there is lots of gas still to find but that is going to take a little while longer to come to market because of the necessity to prove up the gas and form a new joint venture."

The gas project, which could double PNG’s gross domestic product, will consist of gas extraction facilities in the country’s Western Highlands, 450 kilometres of pipeline, and liquefaction facilities near Port Moresby.

ExxonMobil has a 33.2 per cent interest in PNG LNG, Oil Search holds a 29 per cent stake, and Adelaide-based Santos owns 13.5 per cent. Other shareholders include the PNG government and Japan’s Nippon Oil Exploration.

In March, the partners confirmed a $US14 billion ($15 billion) financing deal, clearing the way for construction to accelerate.